Quality assurance is being pulled into the centre of banking regulation as supervisors worldwide tighten expectations around operational resilience, technology risk, and continuous compliance.
For QA and software testing teams inside banks and financial services firms, the shift is becoming increasingly difficult to ignore. Testing is no longer simply a downstream checkpoint before release.
Instead, it is being repositioned as a regulatory control point, one that underpins resilience, customer trust, and the ability to prove compliance under real-world stress.
Regulators are placing greater scrutiny on the technology systems that enable modern banking, from instant payments and fraud monitoring to patching cycles, third-party dependencies, and AI-driven decision-making.
Banks are being asked not only to maintain policies, but to demonstrate that systems remain continuously available, secure, and auditable.
That change is forcing a redefinition of what QA means in practice. In many institutions, the testing function is no longer judged only on defect reduction or delivery velocity, but on whether it can support the broader compliance and resilience agenda.
QA mechanisms for banks
A recent report from Yethi Consulting, an India and US-based provider of quality assurance, test automation, and payments modernisation services for the global banking sector, argued that QA is now inseparable from compliance execution.
In the report, Yethi positioned automation and continuous testing as essential mechanisms for banks facing rapidly evolving regulatory expectations.
“Within the realm of QA, automation has become the way to go for banks for enhanced efficiency and to meet continuous compliance requirements,” the report stated.
“Testing is no longer the last step, but rather the first line of regulatory defence.”
That framing reflects a broader reality across the sector: regulatory expectations are no longer abstract principles. They are increasingly tied to the performance, reliability, and resilience of the underlying systems themselves.
“Today, regulatory requirements come with rapidly evolving governance and operating models to be more effective and efficient,” the report said.
“Technology must demonstrate agility and scalability to meet these requirements and mandated deadlines/ processes.”
The consequence, Yethi argued, is that QA, through continuous testing, has become “a strategic enabler for growth and continuous compliance.”
From defect detection to regulatory defence
For much of the past decade, QA in banking was still often treated as a delivery function: important, but largely internal. The report suggested that era is ending quickly, as regulators focus more directly on technology risk.
“With the speed of technology often outpacing the speed of regulations, quality assurance has shifted from a process that was primarily focused on defect detection into a proactive, front line of regulatory defence,” the Yethi team wrote.
That evolution is being driven by the mismatch between legacy compliance frameworks and modern banking infrastructure. Periodic audits and point-in-time controls are increasingly unable to govern systems that evolve continuously, particularly in payments and digital channels.
“Legacy compliance frameworks that were built for periodic or at a point in time audits struggle to govern real-time evolving systems such as instant payments,” the report continued.
“Testing is no longer the last step, but rather the first line of regulatory defence.”
– Yethi team
In this environment, testing becomes more than a technical discipline. It becomes the mechanism through which banks can mitigate systemic risk, meet regulatory demands continuously, and maintain customer trust.
“A strategic focus on QA is the only mechanism to mitigate systemic risk, meet regulatory demands continuously, and build customer trust in a hyper-competitive marketplace,” the Yethi report authors argued.
They went on to state that regulators are now assessing the systems and processes that make modern banking possible, rather than treating technology as separate from compliance.
“Today, every new regulation comes with an implicit technology assumption,” it said. Regulatory agencies, the report argued, are increasingly tasked with assessing “the actual technology systems and processes that enable modern day banking to exist.”
That is a fundamental shift for QA teams. Testing is no longer about internal assurance alone. It becomes part of how banks demonstrate reliability and resilience to supervisors.
Interconnected infrastructure
Modern banking is increasingly defined by interconnected systems, third-party integrations, and shared infrastructure.
The report placed significant emphasis on this reality, arguing that financial institutions now operate as part of a broader networked ecosystem.
“Modern banking systems operate as interconnected ecosystems, where each financial institution and financial services provider is a ‘node’ of the wider system,” it read.
That connectivity is reshaping how regulators assess compliance. Supervisors are no longer looking only at broad system stability, but at resilience at each connection point.
“Regulators are now looking at outcomes, resilience, and compliance not only from a system, but also at a node level,” the report said.
A failure at one node can cascade quickly across the wider financial system, particularly in areas like fraud monitoring, gateway networks, and third-party dependencies.
“A single failure on a node such as a gateway network, fraud detection engine, or third-party integration, can have cascading outcomes that inhibit financial stability,” Yethi warned.
For QA teams, the implication is that compliance strategies must increasingly be built around validating availability, security, and performance at every integration layer.
“This paradigm shift will require banks to consider different compliance strategies that consider testing the continual availability, security, and performance at the node level,” the report said.
In practice, that means testing is no longer confined to internal applications. It extends to APIs, vendor platforms, cloud infrastructure, and the operational dependencies that connect financial institutions to the wider ecosystem.
Less margin for failure
Few areas illustrate the regulatory consequences of technology reliability more clearly than instant payments. The report argued that the move toward real-time settlement fundamentally changes what resilience means in practice.
“Instant payments have fundamentally altered how banks think about risk,” it explained. Traditional payment systems operated with fixed delays, allowing reconciliation and error correction.
“But with instant payments, there is no room for failure,” the authors warned.
Unlike legacy payment rails, instant payments remove the buffer entirely. A failure becomes not just an IT incident, but an immediate compliance breach.
“A failure will result in an immediate breach of compliance, and the reputational damage will be significant and tough to repair,” the report warned.
“Every new regulation comes with an implicit technology assumption.”
– Yethi team
The report argued that performance testing must therefore expand beyond traditional load testing into ecosystem-level simulation.
“Performance testing must incorporate extensive full-scale ecosystem simulations in high stress scenarios now,” it said.
Banks are expected to demonstrate resilience not only at the system level, but at each connection point across the payments and compliance ecosystem.
“The regulatory expectation is that no single node would become a point of failure, and therefore banks must test for and document resiliency at each connection,” the report said.
That requirement introduces a new testing burden: validating that all nodes operate together in real time, particularly under peak exposure, and producing evidence that resilience is maintained continuously.
Compliance
Yethi framed the compliance burden facing banks as expanding across multiple fronts: patching, business continuity, accessibility, performance standards, fraud monitoring, and AI integration.
“Compliance in 2025 for financial institutions is about demonstrating operational resilience, which is achieved through comprehensive testing methodologies,” it said.
Every major regulatory obligation ultimately rests on robust QA execution, the Yethi team went on to say.
“Every regulatory requirement, be it patch management, meeting performance standards, accessibility compliance, or business continuity, depends on robust QA methodologies for successful implementation,” the report argued.
Banks are increasingly asked to produce detailed compliance evidence on short timelines, including real-time alerts and reporting requirements.
That places pressure not only on compliance teams but on IT and analytics capacity, particularly as monitoring systems expand.
“Automation serves as the only viable solution for continuous compliance.”
– Yethi report
The report also pointed to the rising cost burden of compliance, arguing that AI adoption is increasingly seen as part of the efficiency response.
“Studies show that banks in the US could save over $23.4 billion in compliance costs by integrating AI compliance systems,” it said, while noting that “the upfront costs of setting up and implementing AI systems remains high.”
Banks that treat testing as optional risk exposing themselves to compliance vulnerabilities and reputational damage.
“The institutions that thrive… will be those that recognize testing as mandatory for building trust,” the report said.
Continuous compliance and audit-ready evidence
In Yethi’s view, the traditional sequential QA model is no longer viable in modern banking environments defined by continuous change.
“The challenging expectations of modern banking… have rendered the traditional sequential QA approach obsolete,” the report said.
Instead, the firm pointed to Continuous Compliance-as-Code, embedding automated testing directly into delivery pipelines.
“Continuous Compliance-as-Code (CCaC)… encompasses automated testing within the CI/CD pipeline,” it said.
The goal is not only defect prevention, but auditability. “CCaC provides the necessary tactics to validate node level resilience and generate audit-ready proof such as logs and reports,” Yethi said.
Automation becomes essential because regulators increasingly expect continuous evidence rather than periodic assurance.
“Automation serves as the only viable solution for continuous compliance,” the report argued.
Automated platforms, it said, produce “logs, screenshots, and detailed execution records that serve as proof during regulatory examinations.”
The report also highlighted patch validation as a growing compliance burden, as regulatory updates are no longer rolled out in predictable windows.
“Regulatory updates are no longer rolled out in scheduled maintenance windows, but on a ‘real time’ basis,” it said.
Systems that fall behind patch levels may create compliance risk “well beyond cybersecurity, all the way to operational resilience.”
Security testing
The report placed security testing firmly within the compliance perimeter.
“Banks must show that they can mitigate unauthorised access, data breaches and/or financial fraud and comply with regulatory requirements,” it said.
Negative testing was highlighted as critical for demonstrating that prohibited actions are blocked, not merely detected after the fact. “Testing scenarios that ensure prohibited actions are blocked is critical,” Yethi said.
Accessibility, meanwhile, was framed as a binding obligation rather than a design preference. “Digital accessibility is now a legal requirement,” the report said.
Finally, the report pointed to GenAI as the next major testing frontier for financial institutions.
“With Gen-AI utilization continually rising, QA will play a vital role in ensuring that the outputs are explainable,” it said.
Testing will increasingly focus on bias, transparency, and audit requirements. “Testing will focus on identifying bias and ensure that AI models adhere to audit and transparency requirements,” the report argued.
Yethi concluded that regulators will increasingly favour institutions that can prove resilience through comprehensive testing.
“In 2026, the regulatory environment will favour banks that can display strong operational resilience via comprehensive testing practices,” the report said.
And it was keen to return to its central message: “Testing is no longer the last step but is now the first line of regulatory defence.”
QA FINANCIAL EVENTS
Why not become a QA Financial subscriber?
It’s entirely FREE
* Receive our weekly newsletter every Wednesday * Get priority invitations to our Forum events *
REGULATION & COMPLIANCE
Looking for more news on regulations and compliance requirements driving developments in software quality engineering at financial firms? Visit our dedicated Regulation & Compliance page here.
READ MORE
- Why real-time monitoring and scenario testing are becoming core QA disciplines
- BankDhofar takes an automated approach to strengthen QA
- Banks warned AI still fails on real-world software testing tasks
- SEC’s AI emphasis drives new QA and testing imperatives for US banks
- Inside the chaos: The new reliability discipline reshaping banking QA
WATCH NOW
QA FINANCIAL PODCASTS
